Employees spend most part of their day time at office and during this time they take a lot of financial decisions. Most of these decisions have financial implication on their life and they tend to dwell on the after effects of these decisions while at work. Should employers be worried about this? It’s high time organizations start taking note of the crippling effect of an employee’s financial state of mind. If not avoided the consequences could be alarming!
Personal financial concerns have been rated as the primary reason for employee stress. In a recent study by PWC, it has been estimated that close to 61% of working adults reported stress from financial difficulties while 52% of employees feel that their productivity at work has been affected due to financial problems while for 28% employees personal financial issues resulted in distraction at work. Over 46% employees have expressed some sort of financial concerns and another 33% have stated that their financial problems negatively impact their lives.
Saving for future, debts, cash crunch, not able to save more are financial concerns no one wants to be vocal about. However, shying away from these could be perilous for both employees and employers. The fact is that what affects your employees will inadvertently affect you. In a Federal Reserve Study, 2010 it has been noted that productivity loss for business has been reported to the tune of $5000 per employee per year while revenue loss has been reported over $200 billion every year. Another interesting study by Willis Towers Watson suggests that employees lost 12.4 days per annum due to presenteeism in 2015. Presenteeism is defined as being physically present at work, however, one is not fully functional due to stress at work. This is more dangerous than absenteeism. Therefore, it is quite evident that financially stressed employees are not good for any organization. An employee’s financial worries if brought to work, can mean less productivity and disengaged employee.
Progressive companies acknowledge this trend and are of the opinion that the uncertain and unpredictable economic environment have given them room to design and introduce new benefits that will augment employee attraction, retention and productivity. According to Willis Towers Watson’s Staying@Work, 2015/16 survey, 46% of businesses are looking forward to offering some form of financial guidance and education that covers budgeting, estate planning, debt management, wealth creation, risk management and tax assistance/advisory by 2018.
Financial wellness is a well thought out and structured program or set of programs designed to assess employees’ current financial health and improve their financial behavior while also impacting business outcomes. Financial Wellness has gained popularity in the Western Countries in the recent past, perhaps fueled by the recent economic recession. India is an emerging Nation and it is imperative for Organizations in India to follow suit.
A need based and customized employee Financial Wellness Program can help organizations:
- Improve their bottom line, because employees’ distraction at work due to financial stress gets reduced
- Forecast productive workforce flow throughout the organization
- Increase employee engagement and retention
- Attract and retain good talent
- Build employee loyalty
- Become an “Employee First” company
Financial wellness, from an employee’s standpoint, is being in a state of attaining financial freedom, where:
- They are less stressed financially
They have full control of their finances
- They are in a position to take better and informed financial decisions
- They are future ready
Employers sneaking into an employee’s Personal Finances at the first instance looks intrusive and intervening. However it’s certainly an area employers can and should offer aid – so long as that support isn’t too heavy-passed.